Long-term care program solvency would improve with 18-month delay, but the premium rate would still need to be higher than 0.58%

By: Emily Makings
11:00 am
January 12, 2022

Yesterday the Appropriations Committee heard HB 1732 and HB 1733. HB 1732 would delay the state’s long-term care (LTC) program by 18 months and make individuals born before 1968 eligible for the program if they pay premiums for at least a year (benefits would be prorated). HB 1733 would add voluntary exemptions for veterans with service-connected disabilities, spouses of active-duty service members, employees with nonimmigrant visas for temporary workers, and employees who work in Washington but live elsewhere. (I wrote more about these and other LTC bills that have been introduced here and here.)

Milliman has performed actuarial analyses of both bills. Under current law, the statutory premium rate is 0.58%, but, as we discussed in our policy brief on the program, the premium would need to increase to at least 0.66% in order for the trust account to be solvent over 75 years.

The Office of the State Actuary cautions,

. . . what is presented here are estimates of the actuarial impact of discrete provisions of HB 1732 relative to the “baseline” in the Milliman 2020 Study. To more precisely estimate the full impact of this bill, Milliman would need to analyze its provisions relative to an updated “baseline.” Such an analysis would reflect, among other updated data, actual experience from the private market exemptions as well as interaction effects between private market exemptions and near retirees.

That said, Milliman estimates that compared to the baseline in their 2020 analysis of the program, HB 1732 would reduce the necessary premium rate to 0.64%. (If the delay were enacted without the partial benefit for near-retirees, the necessary premium rate would be 0.63%.) The delay is expected to improve solvency because wages would continue to grow during the delay but the initial benefit level would remain at $36,500.

The actuarial analysis of HB 1733 is also compared to the 2020 study baseline, and it does not assume passage of HB 1732. It estimates that the premium rate would need to increase by 0.05% to 0.08% to cover the additional costs of the voluntary exemptions.

Categories: Employment Policy , Health.